Paystack has evolved from a scrappy Lagos startup to one of the most influential fintech companies in Africa, redefining how businesses accept and process payments across the continent.
It emerged at a time when Nigerian merchants faced broken digital infrastructure: payment integrations were slow, expensive, and riddled with failure.
By building a developer-friendly API and obsessing over user experience, Paystack quickly became the payments backbone for thousands of African businesses — from small online stores to multinational corporations.
The company’s meteoric rise captured the attention of global players. In 2016, Paystack became the first Nigerian startup accepted into Y Combinator, giving it access to Silicon Valley’s resources and networks.
Just four years later, in 2020, it made headlines worldwide when Stripe acquired Paystack for over $200 million — the largest startup exit in Nigeria at the time and a landmark moment for African fintech.
This article is inside Paystack’s journey — from its founding story to its growth strategies, competition, societal impact, challenges, and eventual acquisition.
Disclaimer: The data in this episode of StoryLab is based on publicly available funding information as of July 2025 from reliable sources such as Paystack blog, TechCabal, TechCrunch, and official press releases.
The Beginning
Paystack was born to tackle a critical problem: making online payments work in Africa. Founded in 2015 in Lagos by computer science graduates Shola Akinlade and Ezra Olubi, Paystack set out to simplify digital transactions for businesses.
At the time, Nigerian merchants often relied on slow, error-prone methods (paper forms, cheques and POS machines) that could take weeks to set up.
Shola later noted that integrating payments “would take a minimum of three weeks” under the old system – a frustration that directly inspired Paystack’s creation.
In its pilot phase, the founders spent about a year building the platform “underground,” courting early merchants and iterating on their product. Shola recalls having a waitlist of 300 businesses, which he contacted to refine Paystack’s features.
This customer-driven approach quickly validated demand. In late 2015, Paystack became the first Nigerian company accepted into Y Combinator, securing seed support and mentorship.
The startup publicly launched out of beta in January 2016, offering merchants a “Stripe-like” API that could be integrated with just a few lines of code.
Throughout its early years, Paystack’s founders emphasized the local problem and context. Shola and Ezra knew that most African businesses lacked dedicated developers, so they “built a simple tool to create payment links… without needing a developer”.
They focused on reliability and ease-of-use: local entrepreneurs quickly praised Paystack, saying “it just works,” with one tech founder tweeting, “If you are in eCommerce in Nigeria… and you don’t have Paystack, you’re playing yourself”.
Founders
Shola Akinlade and Ezra Olubi met as students at Babcock University in Nigeria.
Both had worked in technology and finance: Shola had built local software (such as an on-premise “Dropbox” called Precurio) and even advised banks on IT projects, giving him insight into Africa’s payment bottlenecks.
They saw firsthand that African online payments were broken – few businesses could accept card or mobile money payments quickly or affordably.
Shola remembered dealing with banks and telecom providers, and being stunned that an online payment integration could take weeks of paperwork and approvals.
To address this, Shola and Ezra spent 2015 building Paystack’s minimum viable product while talking to hundreds of potential users. Shola describes spending “about one year doing the underground work” – customizing the product to a waiting list of 300 merchants.
They iterated with these early customers, then applied to Y Combinator. By late 2015, Paystack became the first Nigerian company to join YC.
This gave them $120,000 in seed funding and Silicon Valley mentorship.
Shortly afterward, in January 2016, they officially launched Paystack’s platform, promising businesses they could start accepting payments online in “as little as 30 minutes” – a dramatic speed-up from the old process.
Initial traction: The market validated the idea almost immediately. New sign-ups flowed in, and Paystack began processing real transactions for e-commerce sites, startups, and small businesses across Nigeria.
By mid-2016, it was serving thousands of merchants. As Shola later noted, after just a few months, “we launched Paystack – it’s been good so far since we launched”.
Local tech blogs by 2018 reported that Paystack already boasted “over 25,000 merchants” and had processed millions of payments totaling tens of millions of dollars.
This rapid adoption among Nigeria’s SMEs and startups established Paystack as a homegrown leader in web payments, setting the stage for larger growth and funding rounds.
Funding History & Investors
Paystack’s financing journey reflects its climb. After the initial YC seed, the company raised a $1.3 million seed round in late 2016.
That seed funding came from investors like Tencent (via their Africa fund), Comcast Ventures, and Ventures Platform.
Shola explained that this capital was used to build out the payment infrastructure (scalable servers, security, fraud systems) and expand the engineering team to handle growth.
In August 2018, Paystack announced an $8 million Series A, led by Stripe with participation from Visa and continued support from Tencent and Y Combinator. This round brought Paystack’s total financing to about $10 million.
The Series A funds were earmarked for further scaling: the team built new backend systems to handle volume spikes, hired staff in operations and risk management, and began expanding into other African markets (notably Ghana).
They also invested heavily in customer support and fraud-detection technology to handle the growing merchant base.
Finally, in October 2020, Stripe acquired Paystack for over $200 million. Although structured as a merger rather than a cash-out, this deal was effectively a partial exit for Paystack’s shareholders and founders.
It was Stripe’s largest acquisition ever and the biggest startup acquisition in Nigeria to date.
The Paystack founders and early investors benefited significantly from this liquidity event, and Stripe gained Paystack’s platform and team in the process.
Notably, global payment networks also took stakes along the way: Visa had already been a Series A investor, and even after the acquisition, it remained keen on Paystack’s ecosystem, as Visa later announced further partnerships with African fintechs (e.g., Interswitch) following Paystack’s success.
Each round of funding was tied to clear goals – from building core systems and fraud detection at seed stage, to adding channels and compliance staff after Series A, to enabling pan-African expansion post-Stripe acquisition.
See Also: Inside Yoco’s Journey: Powering the Future of SME Payments in SA
The table below summarizes these rounds
| Year | Stage / Round | Amount Raised | Key Investors | Purpose / Goal |
|---|---|---|---|---|
| 2015 | Y Combinator Seed | $120,000 | Y Combinator (YC) | Product development, early merchant onboarding, mentorship, regulatory navigation. |
| 2016 | Seed Round | $1.3 million | Tencent, Comcast Ventures, Ventures Platform, Spark.ng, others | Build infrastructure, fraud detection systems, expand engineering team, initial scaling. |
| 2018 | Series A | $8 million | Lead: Stripe. Others: Visa, Tencent (follow-on), Y Combinator | Regional expansion (Ghana entry), improve fraud & compliance systems, hire operations staff, build partnerships. |
| 2020 | Acquisition by Stripe | $200+ million | Stripe (full acquisition) | Integration into Stripe’s global network, provide capital/resources for pan-African scale, reinforce Africa focus. |
Growth Strategies of Paystack
Paystack’s growth stemmed from several core strategies: building developer-friendly APIs, partnering with SMEs/tech companies, offering transparent support, and leveraging partnerships to scale.
1. API-first product
From day one, Paystack was designed as a plug-and-play service. It offers a complete payments API and developer documentation, letting engineers integrate payments with minimal code.
As TechCrunch noted, Paystack is essentially “a Stripe-like startup…providing online payment facilities by way of an API and a few lines of code”.
On its blog, Paystack highlights features like well-documented APIs, SDKs, and plugins for popular platforms (WordPress, Shopify, Magento, etc.).
It also built seller tools (invoicing, dashboards) so that even non-technical entrepreneurs can use the platform without heavy coding. This API-driven approach made Paystack onboard tech-savvy startups quickly and allowed partners to embed Paystack into new apps.
2. Targeting SMEs and startups
Paystack explicitly focused on the underserved small and medium business segment. Rather than chasing large enterprises, it went after online store owners, freelancers, and local startups – groups who had clear pain points but little bargaining power.
To reach these users, Paystack invested in education and branding: hosting meetups (often in partnership with platforms like Facebook), publishing how-to articles, and speaking at events.
It also adopted transparent, flat pricing with no hidden fees, which appealed to budget-conscious small businesses. By solving genuine needs (e.g. one-click payment links, no monthly charges), Paystack built trust.
As Shola observed, “Paystack wasn’t built by me – it was built by the economy,” reflecting how it arose from real merchant needs.
The team made merchant experience a priority: on-boarding was streamlined (accounts could be verified and live in a day), and customer support was responsive.
3. Strong partnerships
From early on, Paystack allied with banks, card networks, and global players. It integrated with Nigeria’s banking infrastructure (e.,g. the NIBSS instant payment rails) so that funds clear instantly to merchants’ accounts.
In fundraising, Paystack’s backers included Visa and Tencent, providing expertise on international cards and mobile money.
The 2018 partnership with Stripe was especially pivotal: aside from the later acquisition, Stripe became a funding partner and collaborative ally.
Paystack co-branded events with Stripe and hosted joint developer workshops. (A Paystack blog photo shows Lagos meetups with Stripe staff and Nigerian entrepreneurs – underscoring this link.)
These alliances gave Paystack access to technical know-how (PCI compliance, data security) and global channels (Visa/Mastercard networks) that accelerated its feature set.
4. Pan-African expansion
While Nigeria was the beachhead, Paystack always had bigger ambitions. After solidifying its home market, it expanded to Ghana (setting up an office and securing a Bank of Ghana license) and piloted in South Africa.
In May 2021, Paystack formally launched in South Africa, announcing “Hello Mzansi – Paystack is live in South Africa!”.
During its South Africa pilot, Paystack worked “very closely with incredible developers and business owners” to adapt the product to local needs. (It even customized pricing and features for South African merchants.)
The Paystack blog celebrated serving “over 60,000 businesses of all sizes… from tech startups, ecommerce stores, and agencies, to familiar names, such as MTN and SPAR”.
This geographic push – now backed by Stripe’s resources – positioned Paystack as a pan-African payments provider.
5. Brand and story
Paystack nurtured a narrative as Africa’s trustable, founder-led fintech. Media and investors often called it “the Stripe of Africa”, highlighting its modern API-first ethos.
The founders shared their story openly (e.g., interviews, blogs), emphasizing local roots and “transparency” and “learning from merchants.”
By 2023, Paystack even launched initiatives like Paystack Catalyst, a free toolkit for African startups (AWS credits, mentoring, etc.) – both to give back and to keep its brand central in the ecosystem.
All these efforts cemented Paystack’s image as a customer-first, developer-first company focused on African businesses.
Read Also: Inside Lipa Later’s Journey: From BNPL Pioneer to Hard Lessons in African Fintech
Competition in Africa’s Fintech Ecosystem
Paystack operates in a crowded Nigerian/African fintech market. Its main competitors include Flutterwave, Interswitch, Remita, as well as newer players like Chipper Cash, Moniepoint, OPay, and more.
Each has a different focus: for example, Interswitch (a 2002-era fintech) is deeply embedded in Nigeria’s banking network and serves large corporates, while Chipper Cash targets peer-to-peer transfers across borders.
Remita (by SystemSpecs) is widely used for government and bulk payments. Flutterwave – often seen as Paystack’s closest peer – launched around the same time but with a broader remit (facilitating not just web payments but also money transfers across Africa and globally via one API).
Paystack has differentiated itself through ease of use and developer-centric design. TechCabal noted that “Startups praise Paystack… saying ‘it just works’”.
Unlike some incumbents, Paystack offered free and fast onboarding and out-of-the-box recurring billing and payment pages. (For example, Interswitch’s old WebPay once charged a ₦150,000 integration fee and had a 90% failure rate, issues Paystack avoided.)
Flutterwave’s CEO even acknowledged that Paystack’s niche was collecting web payments for startups, whereas Flutterwave focused on broader disbursements and mobile money.
In short, Paystack’s target segment was Nigerian tech founders and SMEs, whereas some rivals catered more to banks or international remittances.
However, Paystack also faces pressure from regulators and incumbents. Nigerian authorities have beefed up licensing rules (for example, requiring separate licenses for “payment service providers” vs. “wallet” services).
In 2025, the Central Bank of Nigeria fined Paystack ₦250 million ($115,000) over its new consumer app “Zap,” deeming it beyond its current license.
This highlights how regulatory complexity is a challenge for all fintechs trying new products in Nigeria. Fraud and cybersecurity are also constant concerns in the payments space (as one industry review notes, Nigerian fintech fraud risk is high and must be managed in real time).
Moreover, talent competition is fierce: talented developers and compliance experts are in short supply, and Paystack must compete with other African unicorns and global firms for hires.
Overall, Paystack’s ecosystem position is strong, but it operates in a landscape of robust local competitors (Flutterwave, Paga, Interswitch, etc.), emerging mobile money champions (OPay, MTN Mobile Money), and evolving regulations.
Its emphasis on developer experience and startup customers has given it an edge, but it must continually innovate to stay ahead of both local rivals and any global payment giants eyeing Africa.
TL;DR
| Company | Founded | Core Focus | Strengths | Weaknesses / Challenges |
|---|---|---|---|---|
| Paystack | 2015 (NG) | API-first online payments for SMEs & startups (cards, transfers, mobile money). | Developer-friendly APIs, fast onboarding, strong SME/startup adoption, Stripe backing. | Regulatory scrutiny (e.g. CBN fine), talent competition, scaling across Africa. |
| Flutterwave | 2016 (NG) | Multi-channel payments & global remittances across Africa. | Pan-African presence, partnerships with global brands, high valuation ($3B+). | Regulatory hurdles, fraud risk, brand reputation hit (2022 controversies). |
| Interswitch | 2002 (NG) | Payment infrastructure, card networks, enterprise & government solutions. | Deep integration with banks, owns Verve card network, established brand. | Seen as slower to innovate, higher integration costs for SMEs. |
| Remita | 1992 (NG) | Bulk payments, payroll, government collections (e.g. Nigerian TSA). | Trusted by governments, strong corporate/Gov adoption. | Less SME/startup focus, weaker developer ecosystem. |
| Chipper Cash | 2018 (UG) | Peer-to-peer and cross-border payments via mobile app. | Zero-fee transfers, huge user adoption (5M+), US/Africa remittances. | Monetization challenges, regulatory pushback on remittances. |
| OPay | 2018 (NG) | Consumer super app: payments, ride-hailing, food delivery, lending. | Chinese backing ($400M+), massive agent network, offline penetration. | Heavy cash-burn model, regulatory concerns, market sustainability. |
| Paga | 2009 (NG) | Mobile money wallet & agent banking. | Large offline agent network (27,000+), strong financial inclusion impact. | Limited international expansion, less appeal to developers. |
See Also: Inside 54gene’s Journey: The Startup That Tried to Rewrite Africa’s Genetic Future
Impact on African Digital Economy
Paystack has had transformative impact on Africa’s e-commerce and SME sector. By enabling online and mobile payments for businesses that previously could not accept them, Paystack has helped bring thousands of merchants into the formal digital economy.
As of late 2020, Paystack reported serving over 60,000 businesses across Nigeria and Ghana. These include not just small e-tailers and startups but also large enterprises and institutions.
For instance, Paystack counts companies like FedEx, MTN Nigeria, Burger King Nigeria and UPS among its clients.
These merchants together process billions of dollars in transactions annually. Paystack’s official communications note “hundreds of millions of dollars each month” flowing through its system.
In practical terms, this means Nigerian vendors can reach customers with credit cards, debit cards, and mobile money like never before.
For example, one case study described how Paystack let an e-commerce platform (The Local Edit) and a health-tech startup (mPharma) accept online payments easily, helping them scale regionally.
Paystack even launched a physical point-of-sale (Paystack Terminal) to bridge online/offline commerce.
During the COVID-19 pandemic, Paystack’s role became especially critical. When Nigeria imposed lockdowns in April 2020, many businesses scrambled to go digital.
Paystack saw a surge in new sign-ups and transaction volume during this period. As the Paystack operations blog notes, “Paystack saw increased merchant signups and customer activity across all payment methods after the April 2020 lockdown”.
Many small vendors and even informal businesses adopted Paystack’s payment links to keep selling when shops closed.
This helped sustain local economies; for instance, one study estimated that faster payment rails in Nigeria (NIBSS Instant Payments) saved businesses $296 million in 2021, and Paystack was a major conduit on those rails.
In sum, Paystack’s contribution to the digital economy includes financial inclusion (bringing non-digital SMEs online), e-commerce growth (fueling more online stores and social-media sellers), and technological empowerment (giving developers easy payment tools).
By lowering the barriers to online transactions, Paystack has enabled Nigerian entrepreneurs and even “side hustles” to monetize digitally.
Its success has inspired confidence in the African startup ecosystem: one commentator notes that Stripe’s acquisition of Paystack was “a vote of confidence for African tech companies’ ability to create value”.
Challenges Faced by Paystack
Despite its success, Paystack has navigated serious challenges both internally and externally:
1. Regulatory hurdles
Nigerian fintech regulation is complex and evolving. Paystack’s core license (a “switching and processing” license from 2016) initially did not allow certain consumer wallet features.
In 2025, the Central Bank explicitly fined Paystack for launching a consumer-facing app (“Zap”) without the proper license. This episode underscores a broader issue: as fintechs innovate (embedding lending, buy-now-pay-later, etc.), they often clash with legacy rules.
Paystack has had to work closely with regulators (and even secure a Ghana PSP license in 2022) to stay compliant. Navigating multiple regulators (Central Banks, security agencies, data privacy authorities) remains an ongoing challenge.
2. Brand & PR challenges
Paystack faced public criticism this year (2025), when it announced a new product called Zap, only to discover another Nigerian startup already operated under that name.
The naming overlap sparked a backlash on social media, with founders and customers questioning Paystack’s due diligence.
Although Paystack later addressed the issue, the episode highlighted the importance of brand management and community perception in Africa’s tight-knit startup ecosystem. It also served as a reminder that even market leaders must tread carefully to maintain goodwill among peers and users.
This controversy underscores Paystack’s brand and PR vulnerabilities, reminding even market leaders that trademark strategy and community perception are as crucial as technology and compliance.
3. Fraud & cybersecurity
Online payment fraud is rampant in Nigeria and requires constant vigilance. Paystack invests heavily in fraud-detection systems, real-time monitoring and identity checks.
Indeed, a fintech review highlights that Paystack uses “real-time transaction monitoring and local ID database integration” to catch fraud.
Nevertheless, any security breach would severely damage merchant trust, so Paystack’s team must continuously update defenses against phishing and scams.
Cybersecurity is thus a top priority and a resource drain (skilled security engineers are expensive).
4. Talent war
As African tech has boomed, the competition for skilled engineers, product managers and compliance experts has intensified. Paystack must compete with other fintechs, banks and international tech firms for top developers.
Reports note that after the Stripe acquisition, Paystack successfully “attracted top-tier talent” to bolster its teams. But attracting and retaining that talent in a hot market – especially when salaries at global firms can be higher – is a constant challenge.
5. Scaling across Africa
Expanding beyond Nigeria introduces operational headaches. Each new country has its own currency, banking system, telecom infrastructure, and consumer behaviors.
Paystack’s entry into Ghana required securing a local license and adjusting to Ghanaian mobile-money habits. Expansion into South Africa (an English-speaking market with well-developed banks) required different features (which Paystack piloted in 2020).
Managing multiple markets demands legal teams, region-specific product adaptations (e.g., new payment channels), and partnerships. This fragmentation slows “go pan-Africa” ambitions.
6. Pressure from big players
Global payment giants and even local institutions are increasingly eyeing Africa. For example, in 2020 Nigeria’s Central Bank encouraged foreign fintech entry (e.g. granting licenses to foreign payment firms).
Larger companies like Mastercard, PayPal, and Tencent have invested in African fintechs, raising expectations.
Paystack must stay innovative to not be leapfrogged. Established banks are also upgrading their own offerings, sometimes in partnership with fintechs like Paystack, but also as independent rivals.
Read Also: Inside M-Pesa’s Journey: An Idea That Changed the Way Africa Moves Money
Stripe Acquisition & Lessons Learned
The October 2020 acquisition by Stripe was a watershed.
Stripe CEO Patrick Collison explained that the deal was about geographic expansion: Africa’s e-commerce was growing 30% annually, and Stripe wanted a partner with local expertise.
Stripe recognized that Paystack had exactly the “talent and regulatory approvals required to build for the multiple payment methods and channels that dominate the African payments landscape”.
In other words, Paystack’s knowledge of Nigeria/Ghana’s fragmented payment ecosystem was the acquisition’s real prize.
From Stripe’s perspective, Paystack brought an installed base of 60,000 merchants (including small businesses, corporates, educators, and betting companies) and a YC-honed engineering team.
Stripe paid over $200 million – its largest acquisition ever – to secure this. According to Stripe’s Patrick Collison, Africa was seen as having “enormous opportunity” for the long-term (online shopping was growing twice as fast as globally).
For Paystack, joining Stripe meant access to vast resources (capital, technology, global network) without losing autonomy; they assured merchants “there will be no disruption” to existing integrations.
This deal sent ripples through the African tech scene. As one industry observer put it, Stripe’s move was “a vote of confidence for African tech companies”.
It signaled to other global firms (Visa, Mastercard, PayPal, etc.) that African fintech had valuable assets.
In fact, many had already been “dating” African startups: Visa and Tencent were in Paystack’s Series A in 2018, and Amsalu (IBEX Frontier) notes that “several other global fintechs… have been ‘dating’ African fintechs… [and] may follow Stripe’s footsteps in forming other ‘I do’s.”.
In short, the Paystack-Stripe exit opened floodgates for investment in Africa’s digital economy.
Lessons from Paystack’s journey
The story highlights a few enduring principles.
First, solve a real, local problem. Paystack didn’t invent payments, but fixed Africa’s broken version of it. They understood that “solving a painful local problem first” is more scalable than generic products.
Second, being developer- and customer-first paid off. By building easy APIs and tools that reflected local needs (e.g. payment links, local-ID verifications), Paystack won trust and loyalty.
Third, partnerships and capital can accelerate impact. The early backing by YC, Tencent, and later Stripe/Visa not only provided funding but also strategic advice and channels.
Finally, the Stripe acquisition showed that global investors now value African fintech: solving on-the-ground challenges in Africa can translate into world-class exits.
Stripe’s Paystack deal also had broader implications. It boosted investor confidence in the continent, inspiring new fintech startups to aim high.
Subsequent deals – like Visa’s strategic investment in Interswitch, WorldRemit’s Sendwave purchase, and DPO’s sale – followed the lead.
It demonstrated that African fintechs can be built, scaled, and sold to the world.
Biggest insights
Paystack’s rise underscores that in fintech (and tech generally), addressing local market pain with world-class technology can attract global success.
The founders’ focus on developer-friendly APIs and on-the-ground customer needs created a platform that could scale across Africa. The Stripe acquisition, finally, proved that “local expertise” in emerging markets is hugely valuable to multinational firms.
In sum, Paystack’s journey – from solving Nigeria’s payment headaches to becoming Stripe’s growth engine in Africa – illustrates how innovation tailored to African realities can yield world-leading fintech success.
- Sources: Authoritative news and corporate sources were used throughout. Key data and quotes come from Paystack’s own blog, TechCrunch, interviews (YC, Business Insider), and fintech analysis.
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